PPI climbs higher
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January 12, 1999: 6:26 p.m. ET
Producer price index last grew 0.4% in December, a 0.2% gain was expected
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NEW YORK (CNNfn) - The producer price index climbed 0.4 percent last month, well ahead of estimates, but economists say the number does not necessarily paint an accurate picture of price performance.
The Labor Department prematurely posted the PPI report on the Internet Tuesday, a day earlier than expected. The blunder marks the second time in as many months that the department's Bureau of Labor Statistics released important economic data ahead of schedule.
According to the report, the producer price index gained 0.4 percent in December on an annual and seasonally adjusted basis, beating out economists' forecasts for a 0.2 percent gain. The index, a key weathervane of inflation, fell 0.2 percent in November.
Excluding the volatile food and energy sectors, the index advanced fully 1 percent, well ahead of the 0.6 percent estimates.
But much of the PPI's gain is attributed to higher tobacco prices, without which economists say the index reveals that inflationary pressures are well under control.
"The whole story is just the cigarettes," said Warburg Dillon Read senior economist Richard Kasmin. "Excluding tobacco, the core PPI for December was down 0.1 percent. So it's all tobacco and this tax on tobacco. The same story continues, more importantly, for prices at the intermediate and crude stages of production."
Kasmin added the report is really "benign" and said, "If you don't smoke you did not see much inflation."
"Prices throughout the pipeline continue to deflate and even at the finished stage of production, they're still benign," he said.
In December, prices for cigarettes jumped nearly 31 percent, following a 0.2 percent gain in November.
The index for finished consumer foods fell 0.1 percent in December, from a 0.5 percent drop the month before and prices for prices for finished consumer goods other than food and energy rose 1.7 percent in December, following a 0.1 percent gain the month before.
By contrast, prices for capital equipment fell 0.1 percent, after rising the same amount in November.
The BLS caused turmoil in financial markets on Nov. 6 when it released part of the market-sensitive monthly employment report for October on the Internet nearly two days ahead of schedule.
"It (the November error) was a premature posting on the Internet due to an internal computer programming error," BLS spokeswoman Kathy Hoyle said then. "It was discovered late this afternoon here at the BLS. It's still being investigated exactly how the problem occurred, We don't know all the details yet."
The department said at the time it was a human error and promised safeguards in place to prevent a repeat of the error.
--from staff and wire reports
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Department of Labor
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